He commented that areas such as cyber security, cloud technology and robotics ‘are about secular growth, so the revenues can keep coming even if the economy is doing less well, whereas with some of the more cyclical companies the earnings would be less secure if the economy is doing badly, but you would also get upside from a strong economy by investing in tech.’
He added that, ‘unless you are a professional investor, or a specialist, it is probably better to buy a basket of stocks or an ETF [his firm are ETF providers], it allows for more diversification than just taking single stock risk.’
Amongst the companies that he finds interesting in the cyber security are Paolo Alto Networks and Checkpoint.
He acknowledged that the technology sector as a whole has gone up a lot in recent times, but added, ‘if you are an investor who is able to take the medium term view, then the valuations are not that important, because these companies can grow a lot in the years ahead.’
He noted, as an example of stocks which trade at optically high valuations right now, but have the capacity to keep growing are Microsoft and Google.
Wang added that investors might also consider broadening their technology exposure to examine the opportunities available in tech stocks outside of the US, he noted that the valuations of many technology businesses in Taiwan are comparatively low, alongside that of the Korean company Samsung.
Wang takes the view that the ‘younger the technology theme is, then the younger the companies will be, and so more likely to be volatile.’
He is concerned at the ability of many US tech companies to grow could be hampered by tougher immigration rules introduced by the Trump government, whilst any trade war would also pose a problem, as it would likely restrict the ability of the US Tech firms to trade globally.